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NEW REPORT: Private Equity Boosts Local Employment Growth

New Modeling Shows Investment Is Positively Associated With Job Creation

WASHINGTON, DC – Today, the American Investment Council (AIC) released a study examining the relationship between private equity investments and local employment growth. The study, entitled “Private Equity Investment and Local Employment Growth: A County-Level Analysis,” estimates the effect of private equity investment volume on employment changes from 2011 to 2014 in 3,053 counties, controlling for various demographic and macroeconomic factors. It finds that private equity investment is associated with greater employment growth.

When constructing models to estimate private equity’s effect on employment growth, the study’s lead author, AIC Manager of Research Josh Cox, determined that the established body of research examining this question has typically used company-level data.

“By focusing on employment at the geographic level rather than company employment, this paper seeks to measure the effect of private equity investment on employment growth at the county-level, where more data are available and the unit of analysis provides a robust sample size,” said Cox. “We found that private investment is positively correlated with higher local employment growth while controlling for other employment influences, revealing a potential positive economic impact.”

Building on hypotheses and insights more often found in labor economics, this study includes several important controls, including labor supply, labor quality, labor cost, unionization, agglomeration and urbanization, industry concentration, and regional location. The model estimates that, on average, private equity investment increased employment growth by 9.82 employees per million dollars of investment between 2011 and 2014.

“The results of this study underscore private equity’s important contribution to the growth of the U.S. economy,” said AIC President and CEO Mike Sommers. “Greater employment growth from private equity investment is a clear indicator of the industry benefits within local communities across our country.”

Read the full study here.

View an infographic on the study here.

About the American Investment Council

The American Investment Council (AIC) is an advocacy and resource organization established to develop and provide information about the private investment industry and its contributions to the long-term growth of the U.S. economy and retirement security of American workers. Member firms of the AIC consist of the country’s leading private equity and growth capital firms united by their successful partnerships with limited partners and American businesses. More information about the AIC can be found at www.investmentcouncil.org.